The Starbucks effect on property values

While far from being a scientific study, I was still amused by these statistics. I don't believe Starbucks really has an affect on the neighborhood but rather, they do a good job in selecting solid neighborhoods to situate their stores in.

Looking at this Google map of Starbucks locations in Toronto, one can see the entire central business district full of Starbucks, in addition to a series of locations all along Yonge Street. Further out, they still seem to have a good presence in various spots all over the GTA (Google map of Starbucks locations in Toronto).

http://www.huffingtonpost.com/2015/01/29/starbucks-home-value_n_6571410.html

Homes located near a Starbucks coffee shop appreciate (aka increase in value) at a far faster rate than homes not near a Starbucks, according to experts at real estate database Zillow. Since 1997, houses near a Starbucks appreciated 96 percent while homes farther away appreciated only 65 percent, Zillow explains in their new book Zillow Talk.

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Whatever the reason, the Zillow authors make two things clear: A neighborhood Starbucks isn't the result of higher home prices; it causes them. And the closer you live to one, the better.

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http://qz.com/334269/what-starbucks-has-done-to-american-home-values/

The Starbucks team explained that while they have 20 or so analytics experts around the world poring over maps and geographic information systems data—assessing factors like an area’s traffic patterns and businesses—the company also empowers dozens of regional teams to come to their own conclusions about location, store design, and a host of other issues.

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this isn't anything new but the last time I read a similar article it's mostly similar to what you stated ... SBX select neighborhoods that have an increasing middle-class neighbourhood to situate their stores in.

I remember this was a topic of discussion when SBX was looking to open in the Gerrard/Jones area as a barometric of Leslieville

It probably has a positive effect on their brand to be seen as something middle class and affluent people consume. You can open a coffee shop anywhere with a parking lot, but to open one right in the heart of a trendy Victorian middle class neighbourhood reflects well on the brand.

In light of all of this, I wonder where Starbucks is considering opening their next location. Could be a sign it's the next up-and-coming neighborhood.

Come on, East Danforth!

I have a love/hate relationship with Starbucks: their espresso is actually quite terrible, but it is a consistent and well-managed business. In contrast, our local coffee shops have good espresso but are not well managed at all. Starbucks is always open when you need it.

DarnDirtyApe said:

Come on, East Danforth!

I have a love/hate relationship with Starbucks: their espresso is actually quite terrible, but it is a consistent and well-managed business. In contrast, our local coffee shops have good espresso but are not well managed at all. Starbucks is always open when you need it.

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It amuses me that East Danforth is in need. (One is being opened on Danforth, just east of Broadview BTW.)

That's because of its Italian roots.

Remember that early scene in the The Sopranos? (Video, lots of cussing)

[Pussy and Paulie are in a coffee shop franchise]
Paulie 'Walnuts' Gualtieri: F#ckin' Italian people. How did we miss out on this?
Salvatore 'Big Pussy' Bonpensiero: What?
Paulie 'Walnuts' Gualtieri: F#ckin' expresso, cappuccino. We invented this sh#t and all these other c#cks#ckers are gettin' rich off it.
Salvatore 'Big Pussy' Bonpensiero: Yeah, isn't it amazing?
Paulie 'Walnuts' Gualtieri: And it's not just the money. It's a pride thing. All our food: pizza, calzone, buffalo moozarell', olive oil. These f#cks had nothin'. They ate pootsie before we gave them the gift of our cuisine. But this, this is the worst. This expresso sh#t.
Salvatore 'Big Pussy' Bonpensiero: Take it easy.

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Remember that early scene in the The Sopranos? (Video, lots of cussing)[/QUOTE]

Oh, I miss that show ... there's a great scene in the last season too, where they try and get protection money out of one of those chains. And fail because the manager says any expenses have to go through head office in Seattle, and if he was to sneak money out for protection, then he'd just get fired. "It's over for the little guy" they comment:

https://www.youtube.com/watch?v=Oz0uEzRSWXw

The conclusion sounds like a load of crap. I think most people here would agree correlation does not imply causation.

Starbucks is very good at locating new shops in areas where they would expect a lot of foot traffic from people who not only like their product but who also can afford it on a regular basis. These also happen to be areas that would generally appreciate quickly. It's nice to be able to walk to the subway or to nice shops or to nice restaurants. Starbucks may as well join in in those areas.

BTW, my neighbourhood has appreciated faster than the average for Toronto, but there won't be any Starbucks here soon. Why? Because my neighbourhood is almost entirely detached homes on medium sized to largish lots with low foot traffic. The draw to my area is not the active stuff of Yonge Street retail. It's the quiet, pretty, and safe neighbourhoods, with affordable in-the-city SFHs, in an area that was partially overlooked in the past but which is becoming more popular as people move further out inside the confines of the amalgamated City of Toronto, without moving to the 'burbs. There is shopping nearby, but this adjacent shopping area won't get a Starbucks any time soon either because the shopping area also borders a lower income neighbourhood, more the Tim Hortons crowd (or even the Coffee Time crowd) than the Starbucks crowd.

BTW, when I lived downtown, there was no Starbucks close to my townhouse. There was a Second Cup, but the closet Starbucks was way too far away to be a real option. The Starbucks showed up in my immediate neighbourhood only after the area exploded with new condo developments.

Oh and i really don't like Starbucks coffee myself. I'm no coffee connoisseur but Starbucks coffee usually tastes burnt to me. I generally don't go to McDonald's but I actually prefer their coffee. Apparently I'm not alone though, as many reviewers have come to the same conclusion. Also, when I was in Italy, the coffee shops in general brewed coffee (or Americanos and espressos) that were sooo much better tasting than anything I've ever gotten at Starbucks. Yet, some claim Starbucks is trying to emulate the European style of coffee roasting, but if that's the case, I'd say that Starbucks is failing miserably in general. But it doesn't matter, because Starbucks has created a fan base for its own mainly North American market, and it sells.

Ex-Montreal Girl said:

It amuses me that East Danforth is in need. (One is being opened on Danforth, just east of Broadview BTW.)

That's because of its Italian roots.

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There are a handful of old school Italian coffee bars, but they are not exactly welcoming. The old Italians are very standoffish in general - there's this parallel universe of old Italian people who pretend that the rest of us don't exist.

One also gets the impression that coffee is not their primary business given the nature of some of their "customers".

Eug said:

Yet, some claim Starbucks is trying to emulate the European style of coffee roasting, but if that's the case, I'd say that Starbucks is failing miserably in general. But it doesn't matter, because Starbucks has created a fan base for its own mainly North American market, and it sells.

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Anyone who would claim that has obviously never been to Europe! That being said, the company is making inroads in some countries for similar reasons as they are in North America - there's an unmet demand for consistent takeaway coffee from a place that is (nearly) always open. London has great coffee houses, but Starbucks is somehow the only one open within walking distance of wherever you happen to be when you need a coffee. Everyone else closes at 5PM, doesn't do takeaway, has no seats, no bathroom, etc.

What correlation does real estate prices have with indie Toronto based coffee shops, would by my next question.

I love the Sopranos and the episode where they try to extort Jumba Juice. That episode was partly about gentrification of an urban New Jersey neighbourhood (warehouses converted to condos, high end franchises replacing mom & pop stores etc).

I agree Eug, McDonald's coffee is pretty decent.

ehlow said:

What correlation does real estate prices have with indie Toronto based coffee shops, would by my next question.

I love the Sopranos and the episode where they try to extort Jumba Juice. That episode was partly about gentrification of an urban New Jersey neighbourhood (warehouses converted to condos, high end franchises replacing mom & pop stores etc).

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Shameless -- another series I like -- is going through the same thing right now. The characters live in the roughest part on the south side of Chicago and all of a sudden there's a "ZEN cafe" that opens up and "lesbians" are buying the ramshackle old houses.

SPOILER ALERT: The ZEN cafe gets shot up by some local toughs.

As for the correlation, I think it can go either way.

(1) Riverdale happened. By the time the indies opened up, Starbucks, Second Cup and Timothy's were already here. Second Cup was first, I am pretty sure. Then came Riverdale Perk, Broadview Espresso, etc. The gentrification preceded the coffecation but I think that's because coffee culture hadn't yet become a thing.

(2) Coffee came to Leslieville before gentrification. Tango Palace on Queen E. opened c. 1995. There's place on Gerrard near Logan (I forget the name) that's just ahead of the gentrification of the strip there -- although I predict that will happen very soon and very quickly. The gap caused by Gerrard Square, the LCBO and train tracks/overpass have, IMO, slowed down the process.

Bottom line, if you build it, they will come -- whether we're talking condos or cafes.

Ex-Montreal Girl said:

Shameless -- another series I like -- is going through the same thing right now. The characters live in the roughest part on the south side of Chicago and all of a sudden there's a "ZEN cafe" that opens up and "lesbians" are buying the ramshackle old houses.

SPOILER ALERT: The ZEN cafe gets shot up by some local toughs.

As for the correlation, I think it can go either way.

(1) Riverdale happened. By the time the indies opened up, Starbucks, Second Cup and Timothy's were already here. Second Cup was first, I am pretty sure. Then came Riverdale Perk, Broadview Espresso, etc. The gentrification preceded the coffecation but I think that's because coffee culture hadn't yet become a thing.

(2) Coffee came to Leslieville before gentrification. Tango Palace on Queen E. opened c. 1995. There's place on Gerrard near Logan (I forget the name) that's just ahead of the gentrification of the strip there -- although I predict that will happen very soon and very quickly. The gap caused by Gerrard Square, the LCBO and train tracks/overpass have, IMO, slowed down the process.

Bottom line, if you build it, they will come -- whether we're talking condos or cafes.

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I'm not a coffee expert, although I really enjoy it, but to me it seems like an indie coffee shop with specialty coffee equipment is seen as "cooler" and more upscale than Starbucks.

Nothing against SB, but I mean, if your neighbourhood has the really good coffee shop that uses blah special equipment and has a unique environment then it's seen as a unique benefit to the hood. I mean, every place has Starbucks. Any suburban big box store with a Chapters has it.

An example would be De Mello Palhetta at Yonge & Eg. Of course, the west end of downtown has a huge amount.

When I visited SF or NYC, people always took me to places like Blue Bottle Coffee or other cool specialty coffee places that you can't get everywhere. SF I'm in the Mission area and you enter this super fashionable place with high ceilings and expensive specialty coffee.

My wife has been a patient in North York General Hospital for 6 months during which time I have been able to observe the Coffee vending situation. Starbucks has the Primo location in the main lobby adjacent to the elevators, couldn't be better if they had designed the building around their location. Tim Horton's has 2 locations, one in the food court surrounded by competition and another on the first floor (actually floor 2) off in a corner. You probably couldn't invent a more generic marketplace than a Hospital, rich and poor of all ethnic origins in the same building. Tim's blows the doors off of Starbucks, Tim's is lined up 10 deep and Starbucks is deserted all day long. Just an observation from a guy who prefers MacDonalds coffee.